NEW DELHI, FEBRUARY 1
Despite the absence of a law on cryptocurrencies and lack of clarity on their regulation, Union Finance Minister Nirmala Sitharaman proposed a 30 per cent tax on any income from the transfer of virtual digital assets in the Union Budget.
The crypto ecosystem welcomed the proposal as it felt this measure was one step towards legitimising its use. However, some felt it will adversely impact investment and dealing in digital assets.
Sitharaman justified the tax because there has been a phenomenal increase in transactions in virtual digital assets which have made it imperative to provide for a specific tax regime.
There will also be no deduction in respect of any expenditure or allowance except the cost of acquisition while computing this income. Also, the loss from transfer of virtual digital assets cannot be set off against any other income. Estimates put the number of crypto investors between 1.5 and 2 crore.
In order to capture the transaction details, Sitharaman also proposed TDS on payment made for transfer of virtual digital at 1%. Gift of virtual digital assets is also proposed to be taxed in the hands of the recipient, she said. Security agencies have expressed concerns over the misuse of digital coins on Dark Web for terror acts, drugs trafficking and money laundering.
Gift recipient also to be taxed
- Any income from transfer of any virtual digital asset to be taxed at the rate of 30%
- Gift of virtual digital asset also to be taxed in the hands of recipient
Read More: No crypto law, but 30% tax on digital assets